Eight celebrities are accused of illegally promoting tokens in the case of Chinese crypto entrepreneur Justin Sun.
Actress Lindsay Lohan, YouTube influencer Jake Paul and several other celebrities have been accused of illegally mining the cryptocurrencies of a Chinese entrepreneur accused of fraud.
The United States Securities and Exchange Commission (SEC) said Wednesday it accused Justin Sun of artificially inflating Tronix (TRX) and BitTorrent (BTT) trading volumes and concealing payments to celebrities to promote the tokens.
In its lawsuit filed in court, the SEC said Sun, which owns Tron Foundation, BitTorrent Foundation, and Rainberry, instructed employees to conduct hundreds of thousands of concurrent or near-concurrent purchases and sales of TRX and BTT with no real change of ownership.
The SEC said Sun’s efforts to give the appearance of a legitimate trade made it easier to sell TRX while keeping prices stable, generating tens of millions of dollars in illegal profits at the expense of investors.
“This case again demonstrates the high level of risk investors face when crypto-asset securities are offered and sold without proper disclosure,” SEC Chairman Gary Gensler said in a statement.
Sun did not immediately respond to a request for comment via Twitter.
Lohan, Paul, rapper Akon, recording artists Ne-Yo and Lil Yachty, and adult actress Michele Mason are said to have pushed crypto investments onto their millions of online followers without disclosing that they were paid.
The six all agreed to pay more than $400,000 in disgorgement, interest and penalties to settle the claims, the SEC said.
Two other celebrities named in the SEC’s complaint, rapper Soulja Boy and pop singer Austin Mahone, did not reach a settlement with the SEC, the agency said.
The SEC imposes civil penalties, such as fines, and does not file criminal charges.
US regulators have stepped up scrutiny of cryptocurrencies following FTX’s stunning collapse and the arrest of its founder Sam Bankman-Fried on fraud allegations last year.